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USTR Report on Foreign Trade Barriers 2013

The 2013 National Trade Estimate Report on Foreign Trade Barriers (NTE), which is prepared by the United States Trade Representative (USTR), surveys significant foreign barriers to U.S. exports. Although the emphasis is on foreign barriers to U.S exports, the information in the Report is a source of useful insights with respect to research and analysis regarding a number of issues and countries including, inter alia, Canada, the Dominican Republic, India and the European Union.

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ACKNOWLEDGEMENTSThe Office of the United States Trade Representative (USTR) is responsible for the preparation of thisreport. Acting U.S. Trade Representative Demetrios Marantis gratefully acknowledges in particular thecontributions of Deputy U.S. Trade Representatives Michael Punke and Miriam Sapiro; USTR GeneralCounsel Timothy Reif; Chief of Staff Lisa Garcia; and Assistant USTR for Public/Media Affairs CarolGuthrie, Senior Policy Advisor Holly Smith, Senior Advisor David Roth, and all USTR staff whocontributed to the drafting and review of this report. Thanks are extended to partner Executive Branchagencies, including the Environmental Protection Agency and the Departments of Agriculture,Commerce, Health and Human Services, Justice, Labor, Transportation, Treasury, and State.Ambassador Marantis would also like to thank Diana Friedman, Jeffrey Horowitz, and Jeffrey Schlandtfor their contributions.In preparing the report, substantial information was solicited from U.S. Embassies around the world andfrom interested stakeholders. The draft of this report was circulated through the interagency Trade PolicyStaff Committee.March 2013

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FOREIGN TRADE BARRIERS-1-FOREWORDThe 2013 National Trade Estimate Report on Foreign Trade Barriers (NTE) is the 28th in an annual seriesthat surveys significant foreign barriers to U.S. exports. This document is a companion piece to thePresident’s Trade Policy Agenda published in March. The issuance of the NTE Report continues theelaboration of an enforcement strategy, utilizing this report, among other tools, in that strategy.On February 28, 2012, the President signed an Executive Order establishing the Interagency TradeEnforcement Center (ITEC) within the Office of the United States Trade Representative. Bringingtogether staff from a variety of agencies with a diverse set of skills and expertise, ITEC is a singleorganization with a clear cross-government commitment to strong trade enforcement. ITEC already hasbegun playing a critical role in multiple enforcement actions, including two actions regarding China, andone each against Argentina, India and Indonesia. The information contained in the NTE represents one ofthe important sources upon which ITEC staff can draw as it conducts research and analysis regarding anumber of countries and issues.In accordance with section 181 of the Trade Act of 1974, as added by section 303 of the Trade and TariffAct of 1984 and amended by section 1304 of the Omnibus Trade and Competitiveness Act of 1988,section 311 of the Uruguay Round Trade Agreements Act, and section 1202 of the Internet Tax FreedomAct, the Office of the U.S. Trade Representative is required to submit to the President, the Senate FinanceCommittee, and appropriate committees in the House of Representatives, an annual report on significantforeign trade barriers.The statute requires an inventory of the most important foreign barriers affecting U.S. exports of goodsand services, foreign direct investment by U.S. persons, and protection of intellectual property rights.Such an inventory facilitates negotiations aimed at reducing or eliminating these barriers. The report alsoprovides a valuable tool in enforcing U.S. trade laws, with the goal of expanding global trade andstrengthening the rules-based trading system, to the benefit of all economies, and U.S. producers andconsumers in particular.The report provides, where feasible, quantitative estimates of the impact of these foreign practices on thevalue of U.S. exports. Information is also included on some of the actions taken to eliminate foreign tradebarriers. Opening markets for American goods and services, either through negotiating trade agreementsor through results-oriented enforcement actions, is this Administration’s top trade priority. This report isan important tool for identifying such trade barriers.SCOPE AND COVERAGEThis report is based upon information compiled within USTR, the Departments of Commerce andAgriculture, and other U.S. Government agencies, and supplemented with information provided inresponse to a notice published in the Federal Register, and by members of the private sector tradeadvisory committees and U.S. Embassies abroad.Trade barriers elude fixed definitions, but may be broadly defined as government laws, regulations,policies, or practices that either protect domestic goods and services from foreign competition, artificiallystimulate exports of particular domestic goods and services, or fail to provide adequate and effectiveprotection of intellectual property rights.

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FOREIGN TRADE BARRIERS-2-This report classifies foreign trade barriers into nine different categories. These categories covergovernment-imposed measures and policies that restrict, prevent, or impede the international exchange ofgoods and services. They include:• Import policies (e.g., tariffs and other import charges, quantitative restrictions, import licensing,and customs barriers);• Government procurement (e.g., “buy national” policies and closed bidding);• Export subsidies (e.g., export financing on preferential terms and agricultural export subsidiesthat displace U.S. exports in third country markets);• Lack of intellectual property protection (e.g., inadequate patent, copyright, and trademarkregimes and enforcement of intellectual property rights);• Services barriers (e.g., limits on the range of financial services offered by foreign financialinstitutions, regulation of international data flows, restrictions on the use of foreign dataprocessing, and barriers to the provision of services by foreign professionals);• Investment barriers (e.g., limitations on foreign equity participation and on access to foreigngovernment-funded research and development programs, local content requirements, technologytransfer requirements and export performance requirements, and restrictions on repatriation ofearnings, capital, fees and royalties);• Government-tolerated anticompetitive conduct of state-owned or private firms that restricts thesale or purchase of U.S. goods or services in the foreign country’s markets;• Trade restrictions affecting electronic commerce (e.g., tariff and nontariff measures, burdensomeand discriminatory regulations and standards, and discriminatory taxation); and• Other barriers (barriers that encompass more than one category, e.g., bribery and corruption,iorthat affect a single sector).Significant foreign government barriers to U.S. exports that prior to the 2010 NTE reports were addressedunder the rubric of “standards, testing, labeling, and certification” measures are now treated separately intwo specialized reports. One report is dedicated to identifying unwarranted barriers in the form ofstandards-related measures (such as product standards and testing requirements). A second reportaddresses unwarranted barriers to U.S. exports of food and agricultural products that arise from sanitaryand phytosanitary (SPS) measures related to human, animal, and plant health and safety. Together, thethree reports provide the inventory of trade barriers called for under U.S. law.The two specialized reports were first issued in March 2010. USTR will issue new, up-to-date versions ofthese two reports in conjunction with the release of this report to continue to highlight the increasinglycritical nature of standards-related measures and sanitary and phytosanitary issues to U.S. trade policy.The reports will identify and call attention to problems resolved during 2012, in part as models forresolving ongoing issues and to signal new or existing areas in which more progress needs to be made.In recent years, the United States has observed a growing trend among our trading partners to imposelocalization barriers to trade – measures designed to protect, favor, or stimulate domestic industries,service providers, or intellectual property at the expense of imported goods, services or foreign-owned or

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FOREIGN TRADE BARRIERS-3-developed intellectual property. These measures may operate as disguised barriers to trade andunreasonably differentiate between domestic and foreign products, services, intellectual property, orsuppliers. They can distort trade, discourage foreign direct investment and lead other trading partners toimpose similarly detrimental measures. For these reasons, it has been longstanding U.S. trade policy toadvocate strongly against localization barriers and encourage trading partners to pursue policy approachesthat help their economic growth and competitiveness without discriminating against imported goods andservices. USTR is chairing an interagency effort to develop and execute a more strategic and coordinatedapproach to address localization barriers. This year’s NTE continues the practice of identifyinglocalization barriers to trade in the relevant barrier category in the report’s individual sections to assistthese efforts and to inform the public on the scope and diversity of these practices.USTR continues to more vigorously scrutinize foreign labor practices and to redress substandard practicesthat impinge on labor obligations in U.S. free trade agreements (FTAs) and deny foreign workers theirinternationally recognized labor rights. USTR has also introduced new mechanisms to enhance itsmonitoring of the steps that U.S. FTA partners have taken to implement and comply with their obligationsunder the environment chapters of those agreements. To further these initiatives, USTR has implementedinteragency processes for systematic information gathering and review of labor rights practices andenvironmental enforcement measures in FTA countries, and USTR staff regularly works with FTAcountries to monitor practices and directly engages governments and other actors. The Administrationhas reported on these activities in the 2013 Trade Policy Agenda and 2012 Annual Report of the Presidenton the Trade Agreements Program.The NTE covers significant barriers, whether they are consistent or inconsistent with international tradingrules. Many barriers to U.S. exports are consistent with existing international trade agreements. Tariffs,for example, are an accepted method of protection under the General Agreement on Tariffs and Trade1994 (GATT 1994). Even a very high tariff does not violate international rules unless a country has madea commitment not to exceed a specified rate, i.e., a tariff binding. On the other hand, where measures arenot consistent with U.S. rights international trade agreements, they are actionable under U.S. trade law,including through the World Trade Organization (WTO).This report discusses the largest export markets for the United States, including 57 countries, theEuropean Union, Taiwan, Hong Kong, and one regional body. Some countries were excluded from thisreport due primarily to the relatively small size of their markets or the absence of major trade complaintsfrom representatives of U.S. goods and services sectors. However, the omission of particular countriesand barriers does not imply that they are not of concern to the United States.NTE sections report the most recent data on U.S. bilateral trade in goods and services and compare thedata to the preceding period. This information is reported to provide context for the reader. In nearly allcases, U.S. bilateral trade continued to increase in 2012 compared to the preceding period (with worldGross Domestic Product and world trade up 3.3 percent and 3.2 percent, respectively). The merchandisetrade data contained in the NTE are based on total U.S. exports, free alongside (f.a.s.)iivalue, and generalU.S. imports, customs value, as reported by the Bureau of the Census, Department of Commerce (NOTE:These data are ranked in an Appendix according to size of export market). The services data are drawnfrom the October 2012 Survey of Current Business, compiled by the Bureau of Economic Analysis in theDepartment of Commerce (BEA). The direct investment data are drawn from the September 2012 Surveyof Current Business, also from BEA.TRADE IMPACT ESTIMATES AND FOREIGN BARRIERSWherever possible, this report presents estimates of the impact on U.S. exports of specific foreign tradebarriers and other trade distorting practices. Where consultations related to specific foreign practices

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FOREIGN TRADE BARRIERS-4-were proceeding at the time this report was published, estimates were excluded, in order to avoidprejudice to those consultations.The estimates included in this report constitute an attempt to assess quantitatively the potential effect ofremoving certain foreign trade barriers on particular U.S. exports. However, the estimates cannot be usedto determine the total effect on U.S. exports either to the country in which a barrier has been identified orto the world in general. In other words, the estimates contained in this report cannot be aggregated inorder to derive a total estimate of gain in U.S. exports to a given country or the world.Trade barriers or other trade distorting practices affect U.S. exports to another country because thesemeasures effectively impose costs on such exports that are not imposed on goods produced in theimporting country. In theory, estimating the impact of a foreign trade measure on U.S. exports of goodsrequires knowledge of the (extra) cost the measure imposes on them, as well as knowledge of marketconditions in the United States, in the country imposing the measure, and in third countries. In practice,such information often is not available.Where sufficient data exist, an approximate impact of tariffs on U.S. exports can be derived by obtainingestimates of supply and demand price elasticities in the importing country and in the United States.Typically, the U.S. share of imports is assumed to be constant. When no calculated price elasticities areavailable, reasonable postulated values are used. The resulting estimate of lost U.S. exports isapproximate, depends on the assumed elasticities, and does not necessarily reflect changes in tradepatterns with third countries. Similar procedures are followed to estimate the impact of subsidies thatdisplace U.S. exports in third country markets.The task of estimating the impact of nontariff measures on U.S. exports is far more difficult, since there isno readily available estimate of the additional cost these restrictions impose. Quantitative restrictions orimport licenses limit (or discourage) imports and thus raise domestic prices, much as a tariff does.However, without detailed information on price differences between countries and on relevant supply anddemand conditions, it is difficult to derive the estimated effects of these measures on U.S. exports.Similarly, it is difficult to quantify the impact on U.S. exports (or commerce) of other foreign practices,such as government procurement policies, nontransparent standards, or inadequate intellectual propertyrights protection.In some cases, particular U.S. exports are restricted by both foreign tariff and nontariff barriers. For thereasons stated above, it may be difficult to estimate the impact of such nontariff barriers on U.S. exports.When the value of actual U.S. exports is reduced to an unknown extent by one or more than one nontariffmeasure, it then becomes derivatively difficult to estimate the effect of even the overlapping tariff barrierson U.S. exports.The same limitations that affect the ability to estimate the impact of foreign barriers on U.S. goodsexports apply to U.S. services exports. Furthermore, the trade data on services exports are extremelylimited in detail. For these reasons, estimates of the impact of foreign barriers on trade in services alsoare difficult to compute.With respect to investment barriers, there are no accepted techniques for estimating the impact of suchbarriers on U.S. investment flows. For this reason, no such estimates are given in this report. The NTEincludes generic government regulations and practices which are not product specific. These are amongthe most difficult types of foreign practices for which to estimate trade effects.In the context of trade actions brought under U.S. law, estimates of the impact of foreign practices onU.S. commerce are substantially more feasible. Trade actions under U.S. law are generally product

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FOREIGN TRADE BARRIERS-5-specific and therefore more tractable for estimating trade effects. In addition, the process used when aspecific trade action is brought will frequently make available non-U.S. Government data (from U.S.companies or foreign sources) otherwise not available in the preparation of a broad survey such as thisreport.In some cases, industry valuations estimating the financial effects of barriers are contained in the report.The methods for computing these valuations are sometimes uncertain. Hence, their inclusion in the NTEreport should not be construed as a U.S. Government endorsement of the estimates they reflect.March 2013EndnotesiCorruption is an impediment to trade, a serious barrier to development, and a direct threat to our collective security.Corruption takes many forms and affects trade and development in different ways. In many countries, it affectscustoms practices, licensing decisions, and the awarding of government procurement contracts. If left unchecked,bribery and corruption can negate market access gained through trade negotiations, undermine the foundations of theinternational trading system, and frustrate broader reforms and economic stabilization programs. Corruption alsohinders development and contributes to the cycle of poverty.Information on specific problems associated with bribery and corruption is difficult to obtain, particularly sinceperpetrators go to great lengths to conceal their activities. Nevertheless, a consistent complaint from U.S. firms isthat they have experienced situations that suggest corruption has played a role in the award of billions of dollars offoreign contracts and delayed or prevented the efficient movement of goods. Since the United States enacted theForeign Corrupt Practices Act (FCPA) in 1977, U.S. companies have been prohibited from bribing foreign publicofficials, and numerous other domestic laws discipline corruption of public officials at the State and Federal levels.The United States is committed to the active enforcement of the FCPA.The United States has taken a leading role in addressing bribery and corruption in international business transactionsand has made real progress over the past quarter century building international coalitions to fight bribery andcorruption. Bribery and corruption are now being addressed in a number of fora. Some of these initiatives are nowyielding positive results.The United States led efforts to launch the Organization for Economic Cooperation and Development (OECD)Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (AntibriberyConvention). In November 1997, the United States and 33 other nations adopted the Antibribery Convention, whichcurrently is in force for 38 countries, including the United States. The Antibribery Convention obligates its partiesto criminalize the bribery of foreign public officials in the conduct of international business. It is aimed atproscribing the activities of those who offer, promise, or pay a bribe. (For additional information, seehttp://www.export.gov/tcc and http://www.oecd.org.)The United States also played a critical role in the successful conclusion of negotiations that produced the UnitedNations Convention Against Corruption, the first global anticorruption instrument. The Convention was opened forsignature in December 2003, and entered into force December 14, 2005. The Convention contains many provisionson preventive measures countries can take to stop corruption, and requires countries to adopt additional measures asmay be necessary to criminalize fundamental anticorruption offenses, including bribery of domestic as well asforeign public officials. As of December 2012, there were 165 parties, including the United States.In March 1996, countries in the Western Hemisphere concluded negotiation of the Inter-American ConventionAgainst Corruption (Inter-American Convention). The Inter-American Convention, a direct result of the Summit ofthe Americas Plan of Action, requires that parties criminalize bribery and corruption. The Inter-American

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FOREIGN TRADE BARRIERS-6-Convention entered into force in March 1997. The United States signed the Inter-American Convention on June 2,1996 and deposited its instrument of ratification with the Organization of American States (OAS) on September 29,2000. Thirty-one of the thirty-three parties to the Inter-American Convention, including the United States,participate in a Follow-up Mechanism conducted under the auspices of the OAS to monitor implementation of theConvention. The Inter-American Convention addresses a broad range of corrupt acts including domestic corruptionand trans-national bribery. Signatories agree to enact legislation making it a crime for individuals to offer bribes topublic officials and for public officials to solicit and accept bribes, and to implement various preventive measures.The United States continues to push its anticorruption agenda forward. The United States seeks bindingcommitments in FTAs that promote transparency and that specifically address corruption of public officials. TheUnited States also is seeking to secure a meaningful agreement on trade facilitation in the World Trade Organization(WTO) and has been pressing for concrete commitments on customs operations and on transparency of governmentprocurement regimes in FTA negotiations. In the Trans-Pacific Partnership negotiations, the United States isseeking expanded transparency and anticorruption disciplines. The United States is also playing a leadership role onthese issues in APEC and other fora.iiFree alongside (f.a.s.): Under this term, the seller quotes a price, including delivery of the goods alongside andwithin the reach of the loading tackle (hoist) of the vessel bound overseas.

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FOREIGN TRADE BARRIERS-7-ANGOLATRADE SUMMARYThe U.S. goods trade deficit with Angola was $8.3 billion in 2012, down $3.8 billion from 2011. U.S.goods exports in 2012 were $1.5 billion, down 0.9 percent from the previous year. Corresponding U.S.imports from Angola were $9.8 billion, down 27.8 percent. Angola is currently the 70th largest exportmarket for U.S. goods.The stock of U.S. foreign direct investment (FDI) in Angola was $5.7 billion in 2011 (latest dataavailable), up from $4.7 billion in 2010.IMPORT POLICIESTariffs and Nontariff MeasuresAngola is a member of the WTO and the Southern African Development Community (SADC). However,Angola has delayed implementation of the 2003 SADC Protocol on Trade (which seeks to reduce tariffs),which remains low as a result of years of civil war and economic underdevelopment. The government isconcerned that early implementation of the SADC Protocol on Trade would lead to a large increase inimports, particularly from South Africa.In September 2008, a tariff schedule came into force that removed duties on the import of raw materials,equipment, and intermediate goods for industries and reduced tariffs on 58 categories of basic goods. Anew tax was also established on imports of luxury products, which are now subject to a 1 percentsurcharge. The 2008 tariff schedule eliminated personal customs fees and transportation taxes. Inaddition to duties, fees associated with importing include clearing costs (2 percent), value added tax (2percent to 30 percent depending on the good), revenue stamps (0.5 percent), port charges ($500 per dayper 20 foot container or $850 per day per 40 foot container), and port storage fees (free for the first 15days, then $20 per 20 foot container or $40 per 40 foot container per day).Tariff obligations for the oil industry are largely determined by individually negotiated contracts betweeninternational oil companies and the Angolan government. Because most U.S. exports to Angola consistof specialized oil industry equipment, which is largely exempt from tariffs, the annual impact of tariffbarriers on U.S. exports is relatively low. If companies operating in the oil and mining industries presenta letter from the Minister of Petroleum or the Minister of Geology and Mines, they may import, withoutduty, equipment to be used exclusively for oil and mineral exploration.Customs BarriersAdministration of Angola’s customs service has improved in the last few years but remains a barrier tomarket access. The Angolan customs code follows the guidelines of the World Customs Organization,the WTO, and the SADC. The construction of two dry ports for container storage in the Luanda capitalarea and the diversion of some marine traffic to the Port of Lobito improved customs clearance. The pre-clearance of containers before transport to Angola through exclusive pre-shipment inspection provider,Bureau Veritas, further improves the efficiency of the process. In November 2012, the Vice-Minister ofTransportation reported a two-week average for the clearance of containers at the Port of Luanda.

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FOREIGN TRADE BARRIERS-8-The importation of certain goods into Angola requires an import license issued by the Ministry ofCommerce. Most forwarding agents can complete this process quickly. The import license is renewableannually and covers all shipments of the authorized good or category of goods imported by the licensedimporter. The importation of certain goods may require specific authorization from various governmentministries. This often leads to bureaucratic bottlenecks that can result in delays and extra costs. Goodsthat require ministerial authorization include the following: pharmaceutical substances and saccharine andderived products (Ministry of Health); radios, transmitters, receivers, and other devices (Ministry of Postand Telecommunications); weapons, ammunition, fireworks, and explosives (Ministry of Interior); plants,roots, bulbs, microbial cultures, buds, fruits, seeds, and crates and other packages containing theseproducts (Ministry of Agriculture); fiscal or postal stamps (Ministry of Post and Telecommunications);poisonous and toxic substances and drugs (Ministries of Agriculture, Industry, and Health); and samplesor other goods imported to be given away (Customs).Required customs paperwork includes the “Documento Único” (single document) for the calculation ofcustoms duties, proof of ownership of the good(s), bill of lading, commercial invoice, packing list, andspecific shipment documents verifying the right to import or export the product. Any shipment of goodsequal to or exceeding $1,000 requires use of a clearing agent. The number of clearing agents increasedfrom 55 in 2006 to 155 in 2011, but competition among clearing agents has not reduced fees, whichtypically range from 1 percent to 2 percent of the value of the declaration.Pre-shipment inspection is recommended for most goods including cars, live animals and living plants,cereals, seeds, food produce, pharmaceuticals, chemicals, alcoholic beverages, and dairy products. TheBureau Inspection Valuation Assessment Control (BIVAC), a private company associated with BureauVeritas, is agent for pre-shipment inspections. Exporters that do not use BIVAC/Bureau Veritas for pre-shipment inspection are subject to additional inspection upon arrival, another time-consuming andbureaucratic process.GOVERNMENT PROCUREMENTThe government procurement process is not competitive and often lacks transparency. Information aboutgovernment projects and procurements is often not readily available from the appropriate authorities andinterested parties must spend considerable time to obtain the necessary information. Calls for bids forgovernment procurements are sometimes published in the government newspaper “Jornal de Angola,” buteven then the contracting agency may already have a preference for a specific business. Under thePromotion of Angolan Private Entrepreneurs Law, the government gives Angolan companies preferentialtreatment in the procurement of goods, services and public works contracts. However these Angolancompanies often later source goods and contract services from foreign companies.Angola is not a signatory to the WTO Agreement on Government Procurement.INTELLECTUAL PROPERTY RIGHTS PROTECTIONAngola is a party to the World Intellectual Property Organization (WIPO) Convention, the ParisConvention for the Protection of Industrial Property, and the WIPO Patent Cooperation Treaty.Intellectual property is protected by Law 3/92 for industrial property and Law 4/90 for the attribution andprotection of copyrights. Intellectual property rights (IPR) are administered by the Ministry of Industry(trademarks, patents, and designs) and by the Ministry of Culture (authorship, literary, and artistic rights).Each petition for a patent that is accepted is subject to a fee that varies by type of patent requested.Although Angolan law provides basic protection for IPR and the National Assembly is working tostrengthen existing legislation, IPR protection remains weak in practice due to a lack of enforcement

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FOREIGN TRADE BARRIERS-9-capacity. The government has worked with international computer companies on anti-piracy measures.No suits involving IPR owned by U.S. citizens or companies are known to have been filed in Angola.INVESTMENT BARRIERSAngola is formally open to foreign investment, but its legal infrastructure makes it difficult to providesufficient protection to foreign investors. Smaller firms in non-extractive industries tend to have a moredifficult time conducting business in Angola as compared to larger, multinational corporations engaged inextractive industries. A private investment law, passed in May 2011, altered benefits and incentivesavailable for investors. The minimum investment required to qualify for incentives was increased from$100,000 under the previous law to $1 million under the new law. Investors must enter into aninvestment contract with the Angolan state, represented by the National Agency for Private Investment(ANIP), which establishes the conditions for the investment as well as the applicable incentives. ANIPoffices are located in Luanda and Washington, D.C. The incentives and benefits, which can includepreferential treatment when repatriating funds out of Angola, tax deductions and exemptions, will benegotiated with ANIP and other ministries of the Angolan government on a case-by-case basis. Indetermining whether to grant incentives, consideration will be given to the economic and social impact ofthe investment, taking into account the government’s economic development strategy. Larger incentiveswith longer validity periods are offered to companies that invest in lesser developed areas outside of thegreater Luanda capital region.In addition to the process described above, investments with a value between $10 million and $50 millionmust be approved by the Council of Ministers, and investments above $50 million require the approval ofan ad hoc presidential committee. By law, the Council of Ministers has 30 days to review an application,although in practice decisions are often subject to lengthy delays.The Angolan justice system is slow, arduous, and not always impartial. The World Bank’s “DoingBusiness in 2013” survey estimates that commercial contract enforcement, measured by the amount oftime elapsed between the filing of a complaint and the receipt of restitution, generally takes 1,011 days inAngola. While an existing law includes the concept of domestic and international arbitration, the practiceof arbitration law is still not widely implemented.Angola’s private investment law expressly prohibits private investment in the areas of defense, internalpublic order, and state security; in banking activities relating to the operations of the Central Bank and theMint; in the administration of ports and airports; and in other areas where the law gives the state exclusiveresponsibility.Although the 2011 private investment law is part of an overall effort by the Angolan government to createa more investor-friendly environment, many laws governing the economy have vague provisions thatpermit wide interpretation and inconsistent application across sectors. Investment in the petroleum,diamond, and financial sectors continues to be governed by sector-specific legislation. Foreign investorscan establish fully-owned subsidiaries in many sectors, but frequently are strongly encouraged (thoughnot formally required) to take on a local partner.Obtaining the proper permits and business licenses to operate in Angola is time-consuming and adds tothe cost of investment. The World Bank “Doing Business in 2013” report noted that it takes an averageof 171 days in Angola compared to a regional average of 100 days to start a business.The government is gradually implementing legislation for the petroleum sector, originally enacted inNovember 2003 (Order 127/03 of the Ministry of Petroleum). The legislation requires many foreign oilservices companies currently supplying the petroleum sector to form joint-venture partnerships with local

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FOREIGN TRADE BARRIERS-10-companies on any new ventures. For the provision of goods and services not requiring heavy capitalinvestment or specialized expertise, foreign companies may only participate as a contractor or resellmanufactured products to Angolan companies. For activities requiring a medium level of capitalinvestment and a higher level of expertise (not necessarily specialized), foreign companies may onlyparticipate in association with Angolan companies.In November 2011, the government passed a law requiring oil companies to conduct a much greater shareof their financial transactions through the Angolan banking system. The law will be implemented inphases. Under the first phase set to begin in January 2013, oil companies will be required to pay theirtaxes owed to the Angolan government through a local bank. Under the final phase, oil companiesoperating in Angola must use local banks to make all payments, including payments to suppliers andcontractors located outside of Angola. U.S. companies are concerned that Angolan banks may lack thecapacity to process all of these transactions.A handful of American businesses have reported difficulties repatriating profits out of Angola. Transfersabove a certain amount require Central Bank approval and commercial banks may be reluctant to gothrough the required bureaucratic process. Transfers of funds out of Angola to purchase merchandise forfuture sale or use in Angola and that can be supported by pro-forma invoices are considerably easier toprocess.OTHER BARRIERSCorruptionCorruption is prevalent in Angola, due to an inadequately trained civil service, a highly-centralizedbureaucracy, antiquated regulations, and a lack of implementation of anti-corruption laws. Therecontinue to be credible reports that high-level officials receive substantial bribes from private companiesthat are awarded government contracts. Gratuities and other facilitation fees are often requested in orderto secure quicker service and approval. It is also common for Angolan government officials to havesubstantial private business interests. These interests are not necessarily publicly disclosed and it can bedifficult to determine the ownership of some Angolan companies. The business climate continues tofavor those connected to the government. There are laws and regulations regarding conflict of interest,but they are not widely enforced. Some investors report pressure to form joint ventures with specificAngolan companies believed to have connections to political figures.Angola’s public and private companies have not traditionally used transparent accounting systemsconsistent with international norms, and few companies in Angola adhere to international audit standards.The government approved an audit law in 2002 that sought to require audits for all “large” companies, butthis law is not generally enforced.Investors have at times experienced harassment, political interference, and pressure to sell theirinvestments. In some cases, these practices have involved individuals with powerful positions within thegovernment who exert pressure either directly or through the established bureaucracy. As a result, someinvestors have experienced significant delays in payments for government contracts and delays inobtaining the proper permits or approval of projects.In November 2009, President Dos Santos called for a zero tolerance policy against corruption. In March2010, the National Assembly approved a law on Public Probity which requires most government officialsto declare their assets to the Attorney General (though the information is not made available to the generalpublic).

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FOREIGN TRADE BARRIERS-11-InfrastructureAngola’s damaged and neglected infrastructure substantially increases the cost of doing business forinvestors. Poor roads, destroyed bridges, and mined secondary routes raise transportation costs. Whilethe government continues its efforts to rebuild Angola’s communications, energy, transportation, and roadinfrastructure, many times its efforts fall short because of poor planning, shoddy work, and lack ofcapacity among Angolan professional and technical workers. For example, while road infrastructure hasimproved, the roadways connecting Angola’s major cities still contain many hazards such as potholes andpoor signage. Cell phone and Internet coverage is unreliable, as communication networks continue to beoversubscribed in the provinces and sometimes even in the capital city of Luanda. Frequent disruptionsof service also plague the water and power utilities forcing the purchase of back-up electrical generatorsand cisterns.

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FOREIGN TRADE BARRIERS-13-ARAB LEAGUEThe Arab League’s boycott of Israeli companies and Israeli-made goods, and its effect on U.S. trade andinvestment in the Middle East and North Africa, varies from country to country. While the boycott stillon occasion poses a significant barrier (because of associated compliance costs and potential legalrestrictions) for individual U.S. companies and their subsidiaries operating in certain parts of the region, ithas for many years had an extremely limited practical effect on overall U.S. trade and investment tieswith many key Arab League countries. The 22 Arab League members are the Palestinian Authority andthe following states: Algeria, Bahrain, Comoros, Djibouti, Egypt, Iraq, Kuwait, Jordan, Lebanon, Libya,Mauritania, Morocco, Oman, Qatar, Saudi Arabia, Somalia, Sudan, Syria, Tunisia, Yemen, and theUnited Arab Emirates. About half of the Arab League members are also Members of the World TradeOrganization (WTO) and are thus obligated to apply WTO commitments to all current WTO Members,including Israel. To date, no Arab League member, upon joining the WTO, has invoked the right of non-application of WTO rights and obligations with respect to Israel.The United States has long opposed the Arab League boycott, and U.S. Government officials from avariety of agencies frequently have urged Arab League member states to end the boycott. The U.S.Department of State and U.S. embassies in relevant host countries take the lead in raising U.S. boycott-related concerns with political leaders in Arab League member states. The U.S. Departments ofCommerce and Treasury, and the Office of the United States Trade Representative monitor boycottpolicies and practices of Arab League member states and, aided by U.S. embassies, lend advocacysupport to firms facing boycott-related pressures from host country officials.U.S. antiboycott laws (the 1976 Tax Reform Act (TRA) and the 1977 amendments to the ExportAdministration Act (EAA)) were adopted to require U.S. firms to refuse to participate in foreign boycottsthat the U.S. does not sanction. The Arab League boycott of Israel was the impetus for this legislation andcontinues to be the principal boycott with which U.S. companies must be concerned. The EAA’santiboycott provisions, implementation of which is overseen by the U.S. Department of Commerce’sOffice of Antiboycott Compliance (OAC), prohibit certain types of conduct undertaken in support of theArab League boycott of Israel. These types of prohibited activity include, inter alia, agreements bycompanies to refuse to do business with Israel, furnishing by companies of information about businessrelationships with Israel, and implementation of letters of credit that include prohibited boycott terms. TheTRA’s antiboycott provisions, administered by the Department of the Treasury/IRS, deny certain foreigntax benefits to companies that agree to requests from boycotting countries to participate in certain types ofboycotts.The U.S. Government’s efforts to oppose the Arab League boycott include alerting host country officialsto the persistence of prohibited boycott requests and those requests’ impact on both U.S. firms and on thecountries’ ability to expand trade and investment ties with the United States. In this regard, U.S.Department of Commerce/OAC officials periodically visit Arab League members to consult withappropriate counterparts on antiboycott compliance issues. These consultations provide technicalassistance to host governments in identifying contract language with which U.S. businesses may or maynot comply.Boycott activity can be classified according to three categories. The primary boycott prohibits theimportation of goods and services from Israel into the territory of Arab League members. Thisprohibition may conflict with the obligation of Arab League members that are also members of the WTOto treat products of Israel on a most favored nation basis. the secondary boycott prohibits individuals,companies (both private and public sector), and organizations in Arab League members from engaging inbusiness with U.S. firms and those from other countries that contribute to Israel’s military or economic

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FOREIGN TRADE BARRIERS-14-development. Such foreign firms are placed on a blacklist maintained by the Damascus-based CentralBoycott Office (CBO), a specialized bureau of the Arab League; the CBO often provides this list to otherArab League member governments, who decide whether or to what extent they follow it in implementingany national boycotts. The tertiary boycott prohibits business dealings with U.S. and other firms that dobusiness with blacklisted companies.Individual Arab League member governments are responsible for enforcing the boycott, and enforcementefforts vary widely from country to country. Some Arab League member governments have consistentlymaintained that only the League as a whole can entirely revoke the boycott. Other member governmentssupport the view that adherence to the boycott is a matter of national discretion; a number of governmentshave taken steps to dismantle various aspects of it. The U.S. Government has on numerous occasionsindicated to Arab League member governments that their officials’ attendance at periodic CBO meetingsis not conducive to improving trade and investment ties, either with the United States or within the region.Attendance of Arab League member government officials at CBO meetings is inconsistent; a number ofgovernments have responded to U.S. officials that they only send representatives to CBO meetings in anobserver capacity, or to push for additional discretion in national enforcement of the CBO-draftedblacklisted company lists.EGYPT: Egypt has not enforced any aspect of the boycott since 1980, pursuant to its peace treaty withIsrael. However, U.S. firms occasionally have found that some government agencies use outdated formscontaining boycott language. In past years, Egypt has included boycott language drafted by the ArabLeague in documentation related to tenders funded by the Arab League. The revolution and resultantpolitical uncertainty which have gripped Egypt since early 2011 have left the future of Egyptianapproaches to boycott-related issues unclear. As Egypt’s government fully establishes lines of authorityand formulates basic foreign policy positions, the Administration will monitor closely its actions withregard to the boycott.JORDAN: Jordan formally ended its enforcement of any aspect of the boycott when it signed theJordanian-Israeli peace treaty in 1994. Jordan signed a trade agreement with Israel in 1995, and later anexpanded trade agreement in 2004 (essentially Israel’s first free trade agreement with an Arab country).Jordanian-Israeli bilateral trade grew from $10 million in 1996 to approximately $374 million in 2008,though trade fell (likely a result of the international financial crisis) to an estimated $130 million in 2010(latest information available). While some elements of Jordanian society continue to oppose improvingpolitical and commercial ties with Israel, government policy does not condone such positions.LIBYA: Libya does not maintain diplomatic relations with Israel and has a law in place mandating theboycott. Under the Qaddafi regime, Libyan government entities routinely inserted boycott language incontracts with foreign companies and government tenders. After the United States lifted trade sanctionsagainst Libya in April 2004, several U.S. firms shunned business opportunities because of Libya’s strictenforcement of its boycott law. The 2011 revolution, which led to the downfall of the Qaddafi regime,and the uncertain political environment which has prevailed since, have made it extremely difficult topredict the future course of Libyan government policy with respect to the boycott. The post-revolutionLibyan government has not articulated its stance vis-à-vis the boycott. The Administration will continueto monitor closely Libya’s treatment of boycott issues.IRAQ: The legal status of Iraq’s boycott laws is ambiguous. A 2009 Council of Ministers decision heldthat Saddam-era boycott laws should not be applied. However, some individual Iraqi government officialsand ministries have ignored that decision and continue to request that companies provide boycott-relatedinformation or comply with boycott restrictions. According to data from the U.S. Department ofCommerce, the number of prohibited requests from Iraq has continued to increase, from 7 in 2009 to 69 in2012 (slightly down from 72 in 2011); Iraq was the second largest source of prohibited requests in 2012.

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FOREIGN TRADE BARRIERS-15-The Iraqi Ministry of Health continues to request compliance with the Arab League boycott and has notremoved boycott-related requirements from tender documents. In addition, Iraq’s Ministry of Planningrequires U.S. companies to answer a boycott questionnaire about a firm’s relationship with Israel as partof the patent registration process. The Ministry of Oil also employs boycott-related language. U.S.officials have urged officials in these ministries to follow the 2009 Council of Ministers decision andhave solicited the assistance of the Ministry of Trade in advocating for compliance with that decision.YEMEN: Yemen has not put a law in place regarding the boycott, though it continues to enforce theprimary aspect of the boycott and does not trade with Israel. Yemen in the past has stated that, absent anArab League consensus to end the boycott, it will continue to enforce the primary boycott. However,Yemen also continues to adhere to its 1995 governmental decision to renounce observance of thesecondary and tertiary aspects of the boycott and does not maintain an official boycott enforcement office.Yemen has remained a participant in the meetings of the CBO in Damascus, but continuing seriouspolitical unrest within the country makes it difficult to predict Yemen’s future posture toward boycott-related issues.LEBANON: Since June 1955, Lebanese law has prohibited all individuals, companies and organizationsfrom directly or indirectly contracting with Israeli companies and individuals or buying, selling oracquiring in any way products produced in Israel. This prohibition is reportedly widely adhered to inLebanon. Ministry of Economy officials have reaffirmed the importance of the boycott in preventingIsraeli economic penetration of Lebanese markets.PALESTINIAN AUTHORITY: The Palestinian Authority (PA) agreed not to enforce the boycott in a1995 letter to the U.S. Government.ALGERIA: Algeria does not maintain diplomatic, cultural, or direct trade relations with Israel, thoughindirect trade reportedly does take place. The country has legislation in place that supports the ArabLeague boycott, but domestic law contains no specific provisions relating to the boycott and governmentenforcement of the primary aspect of the boycott reportedly is sporadic. Algeria appears not to enforceany element of the secondary or tertiary aspects of the boycott.MOROCCO: Moroccan law contains no specific references to the Arab League boycott. Thegovernment informally recognizes the primary aspect of the boycott due to Morocco’s membership in theArab League, but does not enforce any aspect of it. Trade with Israel reportedly does take place, butcannot be quantified from official statistics. U.S. firms have not reported boycott-related obstacles todoing business in Morocco. Moroccan officials do not appear to attend CBO meetings in Damascus.TUNISIA: Upon the establishment of limited diplomatic relations with Israel, Tunisia terminated itsobservance of the Arab League boycott. In the wake of the 2011 revolution, the interim Tunisiangovernment’s policy with respect to the boycott remains unclear.SUDAN: The government of Sudan supports the Arab League boycott and has enacted legislationrequiring adherence to it. However, there are no regulations in place to enforce the secondary and tertiaryaspects of the boycott.COMOROS, DJIBOUTI, AND SOMALIA: None of these countries has officially participated in theArab League boycott. Djibouti generally supports Palestinian causes in international organizations andthere is little direct trade between Djibouti and Israel; however, the government currently does not enforceany aspects of the boycott.

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FOREIGN TRADE BARRIERS-16-SYRIA: Syria diligently implements laws enforcing the Arab League boycott. Though it is host to theArab League CBO, Syria maintains its own boycott-related blacklist of firms, separate from the CBO list,which it regards as outdated. Syria’s boycott practices have not had a substantive impact on U.S.businesses because of U.S. economic sanctions imposed on the country in 2004; the ongoing and seriouspolitical unrest within the country has led to even greater U.S. restrictions on commercial interaction withSyria.MAURITANIA: Though Mauritania ‘froze’ its diplomatic relations with Israel in March 2009 (inresponse to Israeli military engagement in Gaza), Mauritania has continued to refrain from enforcing anyaspect of the boycott.GULF COOPERATION COUNCIL (GCC): In September 1994, the GCC member countries(Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates) announced an end to theirenforcement of the secondary and tertiary aspects of the boycott, eliminating a significant trade barrier toU.S. firms. In December 1996, the GCC countries recognized the total dismantling of the boycott as anecessary step to advance peace and promote regional cooperation in the Middle East and North Africa.Although all GCC states are complying with these stated plans, some commercial documentationcontaining boycott language continues to surface on occasion and impact individual business transactions.The situation in individual GCC countries is as follows:Bahrain does not have any restrictions on trade with U.S. companies that have relations with Israelicompanies. Outdated tender documents in Bahrain have occasionally referred to the secondary andtertiary aspects of the boycott, but such instances have been remedied quickly when brought toauthorities’ attention. The government has stated publicly that it recognizes the need to dismantle theprimary aspect of the boycott. The U.S. Government has received assurances from the government ofBahrain that it is fully committed to complying with WTO requirements on trade relations with otherWTO Members, and Bahrain has no restrictions on U.S. companies trading with Israel or doing businessin Israel, regardless of their ownership or other relations with Israeli companies. Although there are noentities present in Bahrain for the purpose of promoting trade with Israel, Israeli-labeled productsreportedly can occasionally be found in Bahraini markets.Kuwait has not applied a secondary or tertiary boycott of firms doing business with Israel since 1991, andcontinues to adhere to the 1994 GCC decision. Although there is no direct trade between Kuwait andIsrael, the government of Kuwait states that foreign firms have not encountered serious boycott-relatedproblems for many years. Kuwait claims to have eliminated all direct references to the boycott in itscommercial documents as of 2000 and affirms that it removed all firms and entities that were on theboycott list due to secondary or tertiary aspects of the boycott prior to 1991. Kuwait has a three personboycott office, which is part of the General Administration for Customs. While Kuwaiti officialsreportedly regularly attend Arab League boycott meetings, it is unclear if they are active participants.Oman does not apply any aspect of the boycott, and has no laws providing for boycott enforcement.Although outdated boycott language occasionally appears in tender documents, Omani officials areworking to ensure that such language is not included in new tender documents and have immediatelyremoved outdated language when brought to their attention. Omani customs processes Israeli-originshipments entering with Israeli customs documentation, although Omani firms typically avoid marketingany identifiably Israeli consumer products. Telecommunications and mail flow normally between the twocountries. Omani diplomatic missions are prohibited from taking part in Arab League boycott meetings.Qatar does not maintain a boycott law and does not enforce the boycott. However, it normally sends anembassy employee to observe the CBO meetings in Damascus. Although Qatar renounced

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FOREIGN TRADE BARRIERS-17-implementation of the boycott of U.S. firms that do business in Israel (the secondary and tertiary boycott)in 1994, U.S. firms and their subsidiaries occasionally report receiving boycott requests from publicQatari companies. An Israeli trade office opened in Qatar in May 1996, but Qatar ordered that officeclosed in January 2009 in protest against the Israeli military action in Gaza. Despite this closure, Qatarcontinues to allow trade with Israel and allows Israelis to visit the country. Official data from the Qatarigovernment indicated that there was approximately $3 million in trade between Qatar and Israel in 2009.Actual trade, including Israeli exports of agricultural and other goods shipped via third countries, is likelydouble the official figures. Qatar permits the entry of Israeli business travelers who obtain a visa inadvance. The chief executive of Qatar’s successful 2022 World Cup bid indicated that Israeli citizenswould be welcome to attend the World Cup.Saudi Arabia, in accordance with the 1994 GCC decision, modified its 1962 law, resulting in thetermination of the secondary and tertiary boycott. Senior Saudi government officials from relevantministries have requested that U.S. officials keep them informed of any allegations that Saudi entities areseeking to enforce these aspects of the boycott. The Ministry of Commerce and Industry has establishedan office to address any reports of boycott-related violations; reported violations appear to reflect out-of-date language in recycled commercial and tender documents. Saudi companies have usually been willingto void or revise boycott-related language when they are notified of its use.The United Arab Emirates (UAE) complies with the 1994 GCC decision and does not implement thesecondary and tertiary aspects of the boycott. The UAE has not renounced the primary aspect of theboycott, but the degree to which it is enforced is unclear. According to data from the U.S. Department ofCommerce, U.S. firms continue to face a relatively high number of boycott requests in the UAE (thiscould be attributed to the high volume of U.S.-UAE goods and services trade), which the governmentexplains is mostly due to the use of outdated documentation, especially among private sector entities. TheUnited States has had some success in working with the UAE to resolve specific boycott cases.Commerce Department OAC and Emirati Ministry of Economy officials met in early 2012 to continuetheir periodic meetings aimed at encouraging the removal of boycott-related terms and conditions fromcommercial documents. The Emirati government has taken a number of steps to eliminate prohibitedboycott requests, including the issuance of a series of circulars to public and private companies explainingthat enforcement of the secondary and tertiary aspects of the boycott is a violation of Emirati policy.Non-Arab League CountriesIn recent years, press reports occasionally have surfaced regarding the implementation of officiallysanctioned boycotts of trade with Israel by governments of non-Arab League countries, particularly somemember states of the 57 member Organization of the Islamic Conference (OIC), headquartered in SaudiArabia (Arab League and OIC membership overlaps to a considerable degree). Information gathered byU.S. embassies in various non-Arab League OIC member states does not paint a clear picture of whetherthe OIC institutes its own boycott of Israel (as opposed perhaps to simply lending support to Arab Leaguepositions). The degree to which non-Arab League OIC member states enforce any aspect of a boycottagainst Israel also appears to vary widely. Bangladesh, for example, does impose a primary boycott ontrade with Israel. By contrast, OIC members Tajikistan, Turkmenistan, and Kazakhstan impose noboycotts on trade with Israel and in some cases have actively encouraged such trade.

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FOREIGN TRADE BARRIERS-19-ARGENTINATRADE SUMMARYThe U.S. goods trade surplus with Argentina was $6.0 billion in 2012, an increase of $569 million from2011. U.S. goods exports in 2012 were $10.3 billion, up 4.2 percent from the previous year.Corresponding U.S. imports from Argentina were $4.4 billion, down 3.3 percent. Argentina is currentlythe 29th largest export market for U.S. goods.U.S. exports of private commercial services (i.e., excluding military and government) to Argentina were$5.8 billion in 2011 (latest data available), and U.S. imports were $1.7 billion. Sales of services inArgentina by majority U.S.-owned affiliates were $7.3 billion in 2010 (latest data available), while salesof services in the United States by majority Argentina-owned firms were $13 million.The stock of U.S. foreign direct investment (FDI) in Argentina was $13.3 billion in 2011 (latest dataavailable), up from $11.2 billion in 2010. U.S. FDI in Argentina is mostly in manufacturing and nonbankholding sectors.IMPORT POLICIESTariffsArgentina is a member of the MERCOSUR common market, formed in 1991 and composed of Argentina,Brazil, Paraguay, Uruguay, and Venezuela. Venezuela was admitted as a full member in July 2012.MERCOSUR maintains a Common External Tariff (CET) schedule with a limited number of country-specific exceptions, with most favored nation (MFN) applied rates ranging from 0 percent to 35 percentad valorem. Argentina’s import tariffs follow the MERCOSUR CET, with some exceptions. Argentina’sMFN applied rate averaged 11.4 percent in 2012. Argentina’s average bound tariff rate in the WTO issignificantly higher at 31.8 percent. According to current MERCOSUR procedure, any good introducedinto any member country must pay the CET to that country’s customs authorities. If the product is thenre-exported to any other MERCOSUR country, the CET must be paid again to the second country.At the MERCOSUR Common Market Council (CMC) ministerial meeting in December 2011,MERCOSUR members agreed to increase import duty rates temporarily to a maximum rate of 35 percenton 100 tariff items per member country. Although authorized to implement the decision as early asJanuary 2012, Argentina waited until January 2013 to publish decree 25/2013 implementing these tariffincreases. These tariff increases are valid for one year but may be extended through December 2014.The list of products affected can be found at http://infoleg.gov.ar/infolegInternet/anexos/205000-209999/207701/norma.htm. In June 2012, the MERCOSUR CMC further allowed up to 100 additionalcountry-specific exceptions to the CET to be implemented for as long as one year, through December 31,2014. As of February 2013, Argentina has not yet implemented this provision.MERCOSUR member countries are also currently allowed to set import tariffs independently for sometypes of goods, including computer and telecommunications equipment, sugar, and some capital goods.In July 2012, Argentina partially eliminated its exemptions to the CET on capital goods through Decree1026/2012 and currently imposes the 14 percent CET rate on imports of capital goods that are produceddomestically; imports of certain other capital goods that are not produced domestically are subject to areduced ad valorem tariff of 2 percent. A list of the goods affected and their respective tariff rates can befound in http://infoleg.gov.ar/infolegInternet/anexos/195000-199999/199256/norma.htm. Argentina also

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FOREIGN TRADE BARRIERS-20-has bilateral arrangements with Brazil and Uruguay on automobiles and automotive parts intended toliberalize trade and increase integration in this sector among the three countries.Several U.S. industries have raised concerns about prohibitively high tariffs and other taxes in Argentinaon certain products, including distilled spirits, restaurant equipment, and motorcycles. In early 2012, theArgentine government announced a tax increase on “high-end” imported cars and motorcycles with thestated purpose of protecting the domestic industry. Argentine consumers are now required to pay anadditional 10 percent tax on such vehicles imported from outside MERCOSUR.While the majority of tariffs are levied on an ad valorem basis, Argentina also charges compound ratesconsisting of ad valorem duties plus specific levies known as “minimum specific import duties” (DIEMs)on products in several sectors, including textiles and apparel, footwear, and toys. These compoundimport duties do not apply to goods from MERCOSUR countries and cannot exceed an ad valoremequivalent of 35 percent. Although the DIEMs purportedly expired on December 31, 2010, and thegovernment of Argentina has not formally extended them, they are still being charged.During its 39th meeting in August 2010, MERCOSUR’s CMC advanced toward the establishment of aCustoms Union with its approval of a Common Customs Code (CCC) and decision 5610 (December2010) to implement a plan to eliminate the double application of the CET within MERCOSUR. The planwas to take effect in three stages with the first phase to have been implemented no later than January 1,2012. That deadline was not met, however. In November 2012, Argentina became the first MERCOSURmember to ratify the CCC. The CCC still must be ratified by the other MERCOSUR member countries.Nontariff BarriersArgentina imposes a growing number of customs and licensing procedures and requirements, whichmakes importing U.S. products more difficult. The measures include additional inspections, port-of-entryrestrictions, expanded use of reference prices, automatic and non-automatic license requirements, andrequirements that importers have invoices notarized by the nearest Argentine diplomatic mission whenimported goods are below reference prices. Many U.S. companies with operations in Argentina haveexpressed concerns that the measures have delayed exports of U.S. goods to Argentina and, in somecases, stopped exports of certain U.S. goods to Argentina altogether.Since 2011, the government of Argentina increased its reliance on a growth strategy that is based heavilyon import substitution. To carry out this strategy, Argentina increased its use of non-automatic importlicenses (see more detailed discussion below) and imposed other nontariff barriers.Since April 2010, pursuant to Note 232, Argentina has required importers to obtain a “certificate of freecirculation” from the National Food Institute (Instituto Nacional de Alimentos) prior to importing foodproducts. This requirement affects all exporters of food products to Argentina and appears to serve as animport licensing requirement. U.S. companies report that this requirement is used to delay or deny theissuance of certificates of free circulation, and the issuance of such certificates is often contingent uponthe importer undertaking a plan to export goods of an equivalent value.Argentina prohibits the import of many used capital goods. Domestic legislation requires compliancewith strict conditions on the entry of those used capital goods that may be imported, which are alsosubject to import taxes of up to 28 percent and a 0.5 percent statistical tax. Argentina has carved outexceptions for some industries (e.g., graphics, printing, machine tools, textiles, and mining), enablingimportation of used capital goods at a zero percent import tax. The Argentina-Brazil BilateralAutomobile Pact also bans the import of used self-propelled agricultural machinery unless it is rebuilt.Argentina prohibits the importation and sale of used or retreaded tires (but in some cases allows remolded

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FOREIGN TRADE BARRIERS-21-tires); used or refurbished medical equipment, including imaging equipment; and used automotive parts.Argentina generally restricts or prohibits the importation of any remanufactured good, such asremanufactured automotive parts, earthmoving equipment, medical equipment, and information andcommunications technology products. In December 2010, Argentina reintroduced an import prohibitionon used clothing, which is due to expire in 2015.In August 2012, the Argentine tax authority (Administración Federal de Ingresos Públicos or “AFIP”)issued Resolution 3373, which increased the tax burden for importers. The value-added tax (VAT)advance rate rose from 10 percent to 20 percent on imports of consumer goods, and from 5 percent to 10percent on imports of capital goods. The income tax advance rate on imports of all goods increased from3 percent to 6 percent, except when the goods are intended for consumption or for use by the importer, inwhich case an 11 percent income tax rate applies.In May 2012, the Argentine National Mining Agency (Agencia Nacional de Minería) issued resolutions12/2012 and 13/2012 requiring mining companies registered in Argentina to use Argentine-flaggedvessels to transport minerals and their derivatives for export from Argentina and to purchase domesticcapital goods, spare parts, inputs and services, in accordance with the government’s import substitutionpolicies.Import Licenses:In 2012, Argentina continued the use of non-automatic licenses to restrict imports generally and to protectsectors that the Argentine government deems sensitive. Throughout 2012, approximately 600 tariff lineswere subject to non-automatic licenses, including textile products, yarn, and fabrics; iron, steel, and metalproducts; automotive parts; chemical products; general and special purpose machinery; and consumergoods. In January 2013, the non-automatic import license requirements on these products were repealed.U.S. firms have reported long delays in obtaining import licenses, including delays that significantlyexceed the time periods contemplated by the WTO Agreement on Import Licensing Procedures. U.Sindustry notes that the wait time for the issuance of non-automatic licenses generally is between 60 daysto 180 days but can be longer. In many instances, import licenses are denied altogether withoutexplanation or justification. The lack of transparency in Argentina’s implementation and administrationof its import licensing regime creates uncertainty for U.S. exporters as well as U.S. investors inArgentina. Obtaining a license is reportedly burdensome and requires multiple duplicative reviews byseveral different government offices. Once issued, the certificates are generally valid for 60 days.U.S. firms have also reported that applications for import licenses are often not approved unless they areaccompanied by a plan to export goods from Argentina of equivalent value to those that are beingimported or a plan to invest in local production facilities. These requirements are not codified in law orregulation. Rather, they are communicated to companies informally by the Argentine government.In early January 2012, Argentina announced a new measure, effective on February 1, 2012, requiringcompanies to file an online affidavit, known as the Advanced Sworn Statement on Imports (or by itsSpanish acronym “DJAI”) and wait for government review and approval before importing goods. Allgoods imported for consumption are subject to the DJAI requirement. This requirement creates additionaldelays and is reportedly used to restrict imports, including by imposing export or investment plans of thetype required to obtain product specific non-automatic import licenses. Following the implementation ofthe DJAI measure, in September 2012, Argentina eliminated the automatic import licensing requirementsit previously administered on 2,100 tariff lines, mainly involving consumer products.

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FOREIGN TRADE BARRIERS-22-In response to U.S. Government inquiries about its import licensing regime, Argentina has asserted thatall of these measures are nondiscriminatory and consistent with WTO rules. On August 21, 2012, theUnited States requested consultations with Argentina under the dispute settlement provisions of the WTOUnderstanding on Rules and Procedures Governing the Settlement of Disputes concerning these importrestrictive measures and practices. The United States, along with Mexico and Japan, held consultationswith Argentina in September 2012. After the consultations failed to resolve the issue, the United Statesrequested the establishment of a dispute settlement panel in December 2012. The European Union andJapan joined the United States in its panel request.Customs Valuation:Argentina continues to apply reference values to several thousand products. The stated purpose ofreference pricing is to prevent under-invoicing, and authorities establish benchmark unit prices forcustoms valuation purposes for certain goods that originate in, or are imported from, specified countries.These benchmarks establish a minimum price for market entry and dutiable value. Importers of affectedgoods must pay duties calculated on the reference value, unless they can prove that the transaction wasconducted at arm’s length.Argentina also requires importers of any goods from designated countries, including the United States,that are invoiced below the reference prices to have the invoice validated by both the exporting country’scustoms agency and the appropriate Argentine Embassy or Consulate in that country. The government ofArgentina publishes an updated list of reference prices and applicable countries, which is available at:http://www.afip.gov.ar/aduana/valoracion/valores.criterios.pdf.In April 2012, Argentina issued General Resolution 3301, which established reference values for otherhousehold articles and toiletry articles of plastics (HS code 3924.90) from several countries, including theUnited States.Customs External Notes 87/2008 of October 2008 and 15/2009 of February 2009 establish administrativemechanisms that restrict the entry of products deemed sensitive, such as textiles, apparel, footwear, toys,electronic products, and leather goods. While the restrictions are not country specific, they are to beapplied more stringently to goods from countries considered “high risk” for under-invoicing, and toproducts considered at risk for under-invoicing as well as trademark fraud. The full text of Note 87/2008can be found at: http://www.infolegInternet/anexos/145000-149999/145766/normal.htm.Ports of Entry:Argentina restricts entry points for several classes of goods, including sensitive goods classified in 20Harmonized Tariff Schedule chapters (e.g., textiles; shoes; electrical machinery; iron, steel, metal andother manufactured goods; and watches), through specialized customs procedures for these goods. A listof products affected and the ports of entry applicable to those products is available at:http://www.infoleg.gov.ar/infolegInternet/anexos/130000-134999/131847/norma.htm. Depending ontheir country of origin, many of these products are also subject to selective, rigorous “red channel”inspection procedures, and importers are required to provide guarantees for the difference in duties andtaxes if the declared price of an import is lower than its reference price.Since the first measure regarding the limitation of ports of entry was formally announced in 2005, severalprovincial and national legislative authorities have requested the elimination or modification of thespecialized customs scheme. Through several resolutions issued by the Customs Authority in 2007, 2008,2010, and 2011, Argentina has increased the number of authorized ports of entry for certain products.

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FOREIGN TRADE BARRIERS-23-Customs ProceduresCertificates of origin have become a key element in Argentine import procedures because of antidumpingmeasures, criterion values, and certain geographical restrictions. In August 2009, AFIP revised throughExternal Note 4 certificate of origin requirements for a list of products with non-preferential origintreatment. The products effected include certain organic chemicals, tires, bicycle parts, flat-rolled ironand steel, certain iron and steel tubes, air conditioning equipment, wood fiberboard, most fabrics (e.g.,wool, cotton, other vegetable), carpets, most textiles (e.g., knitted, crocheted), apparel, footwear, metalscrews and bolts, furniture, toys and games, brooms, and brushes. To receive the most favored nationtariff rate, the certificate of origin must be certified by an Argentine consulate. The certificate is valid for180 days, which has proven problematic for some companies that import goods subject to non-automaticlicenses where major delays in obtaining an import license results in their issuance after the 180 dayvalidity period for the certificate of origin has expired.Simplified customs clearance procedures on express delivery shipments are only available for shipmentsvalued at $1000 or less. Couriers also are now considered importers and exporters of goods, rather thantransporters, and also must declare the tax identification codes of the sender and addressee, both of whichrender the process more time-consuming and costly. These regulations increase the cost not only for thecourier, but also for users of courier services. The U.S. Government has raised these policies with theMinistry of Federal Planning, Public Investment and Services, the Directorate of Customs, and theNational Administration of Civil Aviation.EXPORT POLICIESArgentina imposes export taxes on all but a few exports, including significant export taxes on keyhydrocarbon and agricultural commodities. In many cases, the export tax for raw materials is set higherthan the sale price of the processed product to encourage development of domestic value-addedproduction. Crude hydrocarbon export taxes are indexed to world commodity benchmarks. Total exporttax revenue in 2012 was equal to 15.5 percent of the value of all Argentine exports (stable from 15.6percent in 2011), including goods not subject to export taxes.Despite proposals from within and outside the Argentine Congress to reduce or eliminate export taxes, thetaxes continue to be actively supported and managed by the government of Argentina, as they are a majorsource of fiscal revenue and create competitive advantages for downstream processors of the productssubject to the tax. The following major agricultural commodities are currently subject to export taxes:soybeans at 35 percent, soybean oil and soybean meal at 32 percent, sunflower seed at 32 percent,sunflower seed meal and sunflower seed oil at 30 percent, wheat at 23 percent, and corn at 20 percent. InAugust 2012, Argentina increased its export tax on biodiesel to 32 percent from 20 percent and eliminateda 2.5 percent rebate. Biodiesel exports are now affected by a sliding scale tax that is reviewed every 15days. As of the end of 2012, the effective export tax was 19.11 percent. In August 2012, pursuant toDecree 1513/2012, Argentina extended the 2009 ban on ferrous scrap exports for 360 days. Ferrous scrapis an important input to steel production.The CCC, approved during the 39th MERCOSUR CMC meeting in August 2010, restricts future exporttaxes and anticipates a transition to a common export tax policy. As noted above, in November 2012,Argentina became the first MERCOSUR member to ratify the CCC. The other MERCOSUR membercountries have yet to ratify it.